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Save Over £1,000 On Your Next Car Loan

Save Over £1,000 On Your Next Car Loan

Category: Loans

Updated: 04/12/2009
First Published: 12/03/2007

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In a few days the latest new car registration code of 07 will be out and a multitude of banks, building societies and car dealerships will be offering a vast array of unsecured loans to tempt punters to splash out on a shiny new motor.

Choosing the wrong loan could cost you a small fortune.

You should be able to find a typical loan rate of 6% if you shop around but many motorists are lured into expensive car showroom deals, unaware of just how much they will be paying in the long run. For a £10,000 unsecured loan - a typical rate of 6% will cost you £1,555.40 in interest over five years, compared to £2,621.60 in interest at a rate of 10%.

Shopping around for the best deal could save you £1,066.20!

Unsecured loans can also sometimes offer the following benefits when compared to car finance:

  • They're more flexible and can be tailored to suit your needs
  • You're free to sell the car on without repaying the loan in full
  • Some will allow you to take a payment holiday for the first three months, which can help you pay for the car insurance, road tax and other early motoring costs
  • You don't have to pay a "balloon" payment if you wish to own the car at the end of the finance agreement

If however you do decide ignore our top tips and go for a finance deal from the car dealership, don't be afraid to haggle. Remember, they need you more than you need them, so take some quotes with you from other dealerships to help you get some money off to pay for the extra interest you'll be paying!

And, don't forget to check out our Loan best buys

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.